The US economy added 162,000 jobs in August, well above the 31,000 average monthly gain of the prior year, and traders responded by pushing up bets on a Federal Reserve rate hike this month. Wall Street economists now say the central bank has little room left to hold rates steady, even as the move risks a clash with the White House over borrowing costs.
Wall Street economists say the Federal Reserve will have to raise rates after a stronger-than-expected jobs report, a move that would set up a fresh clash with the White House over borrowing costs.
August payrolls blow past the recent pace
The US economy added 162,000 jobs in August, blowing past economists' expectations. The gain came in well above the 31,000-a-month average pace of the prior 12 months, while the unemployment rate held unchanged at 4.1%. Average hourly earnings for private-sector workers also rose 10 cents, or 0.3%, to $37.75.
Traders raise the odds of a September move
Polymarket bettors have priced in a 53% chance of a rate hike versus a 48% chance of a hold at the Fed's Sept. 15-16 meeting. Separately, rate futures tracked by CU Today, citing Reuters, put the odds of an increase near 62%, up from roughly 55% before the jobs report. On Friday, Macquarie analysts moved their rate-hike call from December to September, with a second increase expected in the first quarter of 2027.
Fed officials send mixed signals
Joe Brusuelas, RSM chief economist, said the Fed is a little bit behind the curve. According to Yahoo Finance: "They're going to need to hike rates" to reinforce its credibility. A rate hike is not yet certain, though, since Fed Chairman Kevin Warsh has stayed quiet on forward guidance even as his Jackson Hole speech last month was seen as hawkish. Ahead of the Fed's communication blackout period, Fed Governor Christopher Waller signaled support for holding rates steady if next week's inflation report shows easing prices.
The split leaves traders watching for confirmation either way. The Trump administration has pushed hard for lower rates to ease borrowing costs and flatten the yield curve, with the president threatening a trade embargo if the Fed does not cut. That pressure now sits against a jobs report that argues for the opposite move.
Sources: Yahoo Finance, Crypto Daily
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